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THE BACKSIDE OF ECONOMIC GROWTH PREDICTED FOR 2015

January 2, 2015

THE BACKSIDE OF ECONOMIC GROWTH PREDICTED FOR 2015

The yearend financial press is full of rosy predictions of economic growth based on last quarter’s expansion and what that bodes for the future. Get these quotes: “After long struggling to claw its way out of the Great Recession, the world’s biggest economy is on an extended win streak that is edging it closer to full health.” (My question: “extended “win streak” for whom?) “Six years after its financial system nearly sank and nearly that long since the recession ended, the United States is expected to grow in 2015 at its fastest pace in a decade.” (My question:  “growth” in wages or in return on capital?) “Plunging oil prices are a big reason for the optimism. Prices have been cut roughly in half since summer. This means consumers have more to spend on items such as cars, furniture and appliances.” (My question: Does it also mean that corporate America will use this price drop in oil and gas as an excuse not to raise wages from their present slave-wage level of inequality?)

Yes, Virginia, there is a backside to so-called “economic growth” as set forth in the corporate-controlled financial media, and it goes like this > Economic growth for whom? The fact is that we Americans live in a dual economy. There is one in which the investors and corporations live in Dow Land, where economic growth has been reduced to paper profits and capital gain for investors and salaries and bonuses for corporate executives, and there is the one in which the vast majority of us live that is mired in wage and wealth inequality, our jobs outsourced, our right to form and join labor unions effectively denied by state right to work laws etc., where “economic growth” has yet to make an appearance in pay checks.

It should come as no surprise to those who are paying attention that “economic growth” is as a result a meaningless phrase to the great bulk of working as well as unemployed Americans. We live in different worlds; the “economic growth” trumpeted by the financial press from our perspective might as well be happening in Panama or Japan. Benefits flowing from such increased economic performance do not trickle down to those in our economy; such benefits are instead waylaid en route into the coffers of the rich and investment class even while that same class vilifies the poor for being poor and the unemployed for being unemployed. Somehow it is our fault that we didn’t produce more profit to be waylaid into their coffers. The Dow is therefore meaningless to those of us who do not share in its benefits.

The financial press also often trumpets the increase in monthly employment as a harbinger of a growing economy, but truth be told, most of those so employed are at minimum or near minimum wage levels that neither move such people out of this “under-economy” nor make much of an upward dent in aggregate demand. The hard truth that corporate employers do not want to hear is that aggregate demand in this country will only take off when wages are substantially increased as well as a sharing of their workers’ marginal productivity. Unfortunately, the terms “sharing” and “wage increases” appear to have been banished from the corporate lexicon.

Japan is in recession, the EU is 1% away from recession, Greece is on the edge of default, Britain is not doing well, Brazil and Russia are struggling with decreased prices in oil, gas and commodity prices (along with Western sanctions of Russia due to their Ukrainian adventures), and it appears that our economy is performing better than any of theirs due probably to the fact that we are relatively insulated in that we only export 14% of our output, the smallest share among the 34 mostly rich members of the Organization for Economic Cooperation and Development – but here again – performing better for whom? Further, an economy that is “performing better” than economies either in or on the brink of recession doesn’t mean that such an economy is performing well since the comparison is with losers.

Why should the economic underclass have any interest in any measure of the economic performance of the economy such as the Dow or S & P (which may also in part measure multinationals’ activities in foreign countries) when they are uninvolved in any beneficial way from a reading up or down? So the Dow is up? So what? Show me the money!    GERALD    E

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